1099 Locum contractor

[Harris2996]

I’m a travel nurse. I am a 1099 Locum contractor. I have an LLC, taxed as an S-corp, of which I am a W-2 employee. I am aware of the rule where I can work as a “temporary” (work up to one year) and take advantage of all the deductions (travel, meals, lodging, etc). My question is, if I am asked to return to the hospital for another contract (typically 13 weeks each), how long of a gap at the one year max time must transpire for me to return? Is it one month? Is it three months? . No one seems to know and the IRS’s website doesn’t make this simple to find.

[tagteam]

You should contact a local tax professional for this issue.

See https://taxexperts.naea.org/expertdirectory

[Opus 17]

This is discussed somewhat in IRS publication 463.

https://www.irs.gov/forms-pubs/about-publication-463

Travel expenses are allowed if the temporary assignment is expected to last, and actually does last, less than one year.  This will be determined by the actual paperwork, but if audited, the IRS can look at the facts behind the paperwork.  This is an example of the substance over form doctrine--the IRS can judge a situation by what the intent really is, even if the paperwork is different.  

For example, suppose that everyone involved in the situation knows this is a 2 year assignment, but on paper, it is a series of 13 week contracts.  If audited, the IRS would probably deny travel expenses even though the paperwork said something different.

Look especially at the effect of intention in publication 463.  If you expect the assignment to last 10 months, and you get an offer at month 3 to extend it to 13 months, you lose the travel deduction at month 3, not month 12, because that's when your intention changes.  

So in your situation, I would say it is not the gap in time, but the intention.  If you intend to work there more than 1 year, then travel is not allowed, even if there is a gap in your contract that allows you to go home (whether a week or a month).  If your contract ends and you genuinely think it is over, and you go home and starting looking for other contracts (you intend that this relationship is over and you start looking for new work), and this place calls you and asks you to sign on for another stint, it might be ok.  

[tagteam]

Re Publication 463, see Publication 463 (2023), Travel, Gift, and Car Expenses | Internal Revenue Service

It would initially appear as if Example 3 would be most on point.

However, and critically, my opinion is that the following sentence would have significant weight in this particular instance:

A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment.